Accounting Process for Bounced Checks: recommended workflowLast updated on 05/12/2023
If a customer pays for their service by check and that check is later returned by the bank for non-sufficient funds, you will need to enter a record of that transaction in ServiceTitan to maintain accurate Accounts Receivable.
Things to know
Do not use the ‘Bounced Check’ button in QuickBooks, which automatically creates the journal entry described below and would require you to bypass the negative payment from ServiceTitan in order to not duplicate the transaction.
Create a new payment type: NSF Check
Export as: Journal Entry
Account: your bank account
Note: If you are using Payment Collections, you must turn on Automated Refund Workflow. For more information, see Set up automated refund workflow.
With Payment Collections Turned On
Navigate to the invoice with the NSF check.
On the check that was returned by the bank, click the Refund button.
Enter NSF Check in the box
Enter the full amount of the NSF check
Select Cut Check in Accounting Software
Click Advanced Options.
Memo for Payment:
Update the date if necessary.
Click Process Refund.
Click the Edit pencil on the negative payment.
Change the Payment Type to NSF Check.
Your payments will look like this.
It will create a journal entry in your accounting software.
Charge an NSF Fee
If you would like to charge a fee to your customer for the returned check or perhaps pass on the fee that you were charged by the bank, you will first need to create an item for this in your pricebook.
Add an adjustment invoice to the original invoice and add the Returned Check Fee service item.
Your invoice is now updated to reflect the original services and payment, returned check, and bad check fee.
Without Payment Collections Turned On
To record the transaction of the returned check on your invoice in ServiceTitan, you will enter the negative payment for the amount of the check. This essentially cancels out the first payment and the invoice again reflects a balance due.
The negative payment/NSF Check payment from ServiceTitan will export to QuickBooks as a journal entry, with a debit to Accounts Receivable (increase) and a credit to your Bank Account (decrease).
Important note: Some features may not be currently included in your account and additional configuration may be required. Please contact technical support for details.
Disclaimer: Information provided in this article is for informational purposes only and it should not be construed to be legal advice. Information provided in this article may also not constitute the most up-to-date legal or other information. You should not act or refrain from acting on the basis of any information in this article to meet any compliance requirements without seeking independent legal or other professional advice.